On February 27, 2024, the Federal Government of Nigeria introduced the Expatriate Employment Levy (“the levy”), a significant policy aimed at regulating the employment of foreign workers within the country. This mandatory contribution is designed to strike a balance between the benefits of expatriate employment and safeguarding local labour markets and resources.
How Does the Expatriate Employment Levy Work?
The Expatriate Employment Levy applies to private sector operators who utilise foreign workforce or rely on expatriate labour. It seeks to ensure that employers hiring expatriates contribute to the Nigerian economy. The goal of the levy is to regulate the influx of foreign workers and encourage skill transfer.
The levy applies to expatriate workers occupying quota positions, engaged on a temporary work permit, or who stay or work in Nigeria for 183 days or more within a year. It is payable annually at a rate of USD 15,000 for Directors and USD 10,000 for other categories.
The levy does not apply to accredited staff of Diplomatic Missions, Government officials, or employees of international agencies and their dependents, unless they engage in employment within Nigeria. In addition, employers can reallocate positions of departing employees without charge until the end of the levy’s existing validation.
Compliance
According to the policy, employers must pay the levy by the last day of February each year. Payment is made through an online portal, and the receipt is a prerequisite for work or residence permit issuance or renewal.
Employers are required to maintain comprehensive records of payment of the levy. Expatriates are expected to provide accurate information and cooperate with employers and government agencies. The Nigeria Immigration Service (NIS) verifies submitted information, and non-compliance with paying the levy may result in penalties, including fines, imprisonment, or work permit revocation.
Potential Impact on the Economy
- Revenue Generation: The levy is expected to contribute to government revenue, which can be reinvested in infrastructure, education, and healthcare.
- Skill Transfer and Knowledge Sharing: By encouraging expatriates to share expertise with local workers, the levy might be a good way to promote skill development.
- Labor Market Protection: One of the goals of the levy is to ensure that foreign workers do not displace local talent, maintaining employment opportunities for Nigerians.
- Industry Competitiveness: If properly managed, the levy can potentially enhance collaboration between public and private sectors, and foster economic growth.
Conclusion
The Expatriate Employment Levy is a strategic move by Nigeria to harness the benefits of expatriate labour while safeguarding its own workforce and resources. The Expatriate Employment Levy is not unique to Nigeria, as other countries have implemented similar policies. Malaysia, Singapore, and Saudi Arabia are examples of countries that have their own expatriate levies. The actual value Nigeria will derive from this policy remains to be seen, as it will depend on how successfully the policy can be implemented.